SMART board clears way for developers to seek money for condos, shopping space

MICHAEL COIT

THE PRESS DEMOCRAT | December 19, 2008

Developers of the proposed Santa Rosa Railroad Square transit village have the green light to seek state and federal funding after reaching final agreement with the Sonoma-Marin Area Transit district.

Filling a $25 million gap to fully fund the $200 million project is the task for New Railroad Square, a partnership of developers who envision a public market, retail and office space, 40 affordable housing units and 211 condominiums bordering the railroad tracks west of downtown Santa Rosa.

"We should have it pretty much together a year from now. The vote was a very important milestone," said Michael Dieden, a Los Angeles developer and one of the partners in the project.

A unanimous vote Wednesday by the SMART board culminated five months of work after the parties initially agreed to the latest development outline for the 10-acre site at the heart of Railroad Square.

The move follows last month's approval by Sonoma and Marin county voters of a quarter-cent sales tax for a commuter train to run between Cloverdale and Larkspur.

A commuter train is critical to the development, which is intended to cater to people who want to live and work there or commute without getting into a car.

To move the development forward, the developers now need public financing. That would provide seed money to qualify for private funding and eventually purchase the Railroad Square land SMART owns, Dieden said.

"It allows us to go out to the private financing market," he said.

Next month, the developers expect to apply for $12 million in state money from a bond fund dedicated to projects that put housing near mass transit on land in city centers. They also plan to seek federal tax credits for developments in urban areas needing revitalization. Other public sources would include Santa Rosa redevelopment funds, Bay Area transit grants and federal money.

New Railroad Square would purchase 8 acres SMART owns once financing is secured and other conditions are met under the agreement.

The developers entered into a purchase option for the land with the SMART approval Wednesday and made an initial $25,000 payment.

The remaining 2 acres are owned by the John Stewart Co. of San Francisco. Stewart, who plans condominiums on his land, joined with Dieden earlier this year.

Dieden has been planning development of the public market, retail and office space, and affordable housing. The third partner is John Clawson of Equity Community Builders, another San Francisco developer.

"The project will be done sooner because of that. But the timing will mostly be dictated by market conditions," Dieden said.

As planned, the commercial space and affordable housing would go forward once financing is secured. The condominiums planned wouldn't be built until the housing market rebounds.

You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.